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Please be advised that future verbal and written communications from the bank may be in English only. These communications may include, but are not limited to, account agreements, statements and disclosures, changes in terms or fees; or any servicing of your account.

Por favor, tenga en cuenta que es posible que las comunicaciones futuras del banco, ya sean verbales o escritas, sean únicamente en inglés. Estas comunicaciones podrían incluir, entre otras, contratos de cuentas, estados de cuenta y divulgaciones, así como cambios en términos o cargos o cualquier tipo de servicio para su cuenta.

Informamos que as futuras comunicações do banco, verbais e escritas, podem estar disponíveis apenas em inglês. Essas comunicações podem incluir, entre outras, acordos de conta, extratos de conta e divulgações, alterações aos termos ou tarifas, ou qualquer tipo de serviço pertinente à sua conta.

仅此通知,本行即日起发出的口头及书面通信可能将只提供英文版本。这些通信可能包括但不限于账户协议,账单和通知,条款或费用变更;或任何为您账户提供的服务。

Please be advised that future verbal and written communications from the bank may be in English only. These communications may include, but are not limited to, account agreements, statements and disclosures, changes in terms or fees; or any servicing of your account.

Por favor, tenga en cuenta que es posible que las comunicaciones futuras del banco, ya sean verbales o escritas, sean únicamente en inglés. Estas comunicaciones podrían incluir, entre otras, contratos de cuentas, estados de cuenta y divulgaciones, así como cambios en términos o cargos o cualquier tipo de servicio para su cuenta.

Informamos que as futuras comunicações do banco, verbais e escritas, podem estar disponíveis apenas em inglês. Essas comunicações podem incluir, entre outras, acordos de conta, extratos de conta e divulgações, alterações aos termos ou tarifas, ou qualquer tipo de serviço pertinente à sua conta.

仅此通知,本行即日起发出的口头及书面通信可能将只提供英文版本。这些通信可能包括但不限于账户协议,账单和通知,条款或费用变更;或任何为您账户提供的服务。

Our-constructive-outlook-for-Latin-America

Perspectives

Our constructive outlook for Latin America

Jorge Amato

By Jorge Amato

Head - Latin America Investment Strategy

August 23, 2017Posted InForeign Exchange, Equities, Investment Strategy, Investments and Fixed Income

Fundamentals in Latin America remain fairly constructive in our view. On the growth front, while real GDP for 2017 and 2018 is unlikely to be stellar, we look for the cyclical recovery to continue. Real effective exchange rates remain far from historically overvalued levels, nominal currencies should remain stable, and inflation is low. Governments continue to pursue sectoral and structural reforms, amid longstanding fiscal pressures. We believe progress will be made on this front in the coming months.

 

From a technical positioning perspective, we continue to see strong inflows into the asset class and the region. Citi Research estimates that emerging markets (EM) as a percentage of total investible asset classes has grown from less than 7% in 2010 to nearly 12% currently. EM has long been seen as an alternative asset class, one that cross-over investors allocated to when returns in traditional asset classes were no longer attractive. While this was positive on the upside, the opposite was true to the downside, generating unwanted portfolio flows into EM. Increased participation by long term real money investors and higher percentage participation in overall portfolios should result in more stable flows going forward.

LATAM-GIC

Within EM fixed income allocations, the Citi Private Bank Global Investment Committee (GIC) continues to allocate to local debt markets, where currencies are expected to remain stable and real rates are attractive, favoring the carry trade. EM inflation has also been falling, allowing central banks to cut rates and boost total returns. While the positive feedback loop between FX/inflation/rates remains a favorable one and we do look for further interest rate cuts, we do recognize that further downside for inflation is limited going forward and real interest rates are looking less attractive at the margin.

 

Latin American equity markets continue to perform well. The GIC has looked beyond political noise and focused on valuations and fundamentals. Strong performance has characterized recent weeks, recovering from the second quarter’s slump. Relative valuations and cyclical recoveries suggest overweight exposure should be maintained. We recognize the potential for short-term global and region-specific catalysts to cause corrections after periods of above average returns so tactical overlays in satellite portfolios and strategies using more outright directional exposure to reduce beta make sense at current levels.